Commission offers softer rules to Hungary, Poland to sweeten EU prosecutor deal

EU Commissioner of Justice Věra Jourová said on Friday (6 October) that she is ready to simplify rules controlling cohesion expenditure if Poland and Hungary join the new European Public Prosecutor’s Office (EPPO).

Eyeing Budapest and Warsaw, Jourová said that she would propose for the next Multiannual Financial Framework (MFF) to “simplify” and “soften” cohesion rules if countries agree to come under the new EU prosecutor’s oversight, she told a group of journalists today.

“I truly believe that EPPO could enable us to simplify the rules,” she insisted.

She argued that in the current system there are “too many actors” and rules to ensure a better spending of EU funds. But instead of improving the quality of EU budget management, they overheat the system.

“I always want to keep control and order, but I don’t want to enable duplicity of controlling bodies in member states,” she said.

In her view, once the EPPO is fully operational in 2020, the new body would act as a deterrent. As a result, less preventive rules would be needed to avoid mismanagement or fraud committed using EU funds.

Countries that still turn down the option to be under the EPPO’s supervision will have to comply with the existing preventive rules and more scrutiny from OLAF, the EU’s anti-fraud agency.

The new EU prosecutor will investigate fraud and corruption cases involving cohesion and agricultural funds. It will also prosecute VAT fraud, as this tax is used to finance the EU budget.

According to some conservative estimates, every year €500 million is lost in EU projects. In the case of VAT, the Commission believes that criminal networks are causing a €50 billion hole in member state public finances using the so-called carousel scheme.

But for Jourová it is not only a question of money. “There is too much trust at stake,” she stressed. If money allocated for roads and wind farms ends up in the Bahamas or Cartier watches, the bloc’s common pot would lose support from member states.

Hungary and Poland are two of the countries that, to date, have refused to join enhanced cooperation to set up the public prosecutor’s office.

The Netherlands, Sweden and Malta also ruled out supporting the project, as they are wary of the negative impact it may have on their national judiciary systems. Meanwhile, Denmark, the UK and Ireland have an opt-out on judiciary matters.

Jourová intends to step up her efforts in the coming weeks to convince the reluctant countries to join the group of 20 member states that are currently part of the system.

This week, the European Parliament gave its approval to the EPPO. The Council is expected to give its final blessing next week.

As part of the process to prepare for the arrival of EPPO, Jourová is also looking into how to fine-tune the competences of Eurojust and OLAF.

She said that OLAF could take care of minor offences, including mistakes in implementing the EU budget or cases of mismanagement. while Eurojust could end up strengthening its competences in the area of non-financial crimes.

Even before the final approval of the EPPO, Commission President Jean-Claude Juncker proposed last month to extend its scope to include the fight against transnational crime and terrorism in the EU.

Jourová argued that the Union needs a “stronger response” to address the borderless nature of criminality in Europe today.

Eurojust and Europol are compiling enough evidence to make the case to add these new competences to the prosecutor’s mandate. The report and the draft proposal to extend the EPPO’s powers will come in the second half of 2018.